After two years of searching, a wildcat oil strike off...

November 17, 1985|By Barry Brown, Special to The Tribune.

TORONTO — After two years of searching, a wildcat oil strike off Canada`s East Coast near the Hibernia oil fields could be a ``North Sea West,`` according to Robert Blair, chairman of Husky Oil Ltd. of Calgary, referring to the oil fields off England and Norway.

There has been talk of a ``North Sea West`` off Newfoundland since the Hibernia fields were discovered six years ago. However, the optimism faded when it was found that the Hibernia oil was more costly to develop than anticipated. Now, oilmen in the Canadian offshore game report a more realistic attitude, and that makes the results from the North Ben Nevis tests--about 15 miles east of the Hibernia fields--all the more encouraging.

Initial testing at the North Ben Nevis P-93 site indicates the reservoir could produce 12,000 barrels a day as early as 1990.

Estimates vary on the size of the overall field, but Keith Lazelle, vice president of Bow Valley Industries of Calgary, Husky Oil`s partner in the East Coast operations, puts it at a ``conservative 150 million barrels.``

The companies have reported combined flow rates, after three tests, of 8,000 barrels a day and a high oil-to-gas ratio. Bob Pogontcheff, senior vice president of Husky, says the field`s permeability makes it quite productive for an East Coast well.

While cautioning that follow-up tests are still needed, he said results from North Ben Nevis and another well, White Rose, would be ``comparable to and maybe better than (Hibernia) because of our high productivity.`` Lazelle said both companies are ``enthusiastic`` about initial tests at White Rose and will announce ``within months`` their findings.

The North Ben Nevis and White Rose findings are good news for companies involved in East Coast drilling, because it means an upward revision in estimates of the amount of recoverable oil in the area. Interest in Canada`s East Coast oil fields has declined considerably since the Hibernia discovery in 1979.

Although the Hibernia is estimated to contain 1.5 billion barrels of oil, and there have been other small discoveries, declining world oil prices, the end of federal incentive grants, the poor quality of discovered oil reservoirs, weather conditions and the severely faulted nature of the underwater wells have dampened enthusiasm.

Not including the Hibernia fields, other exploratory wells on the Grand Banks have produced 23,000 barrels of oil a day.

Another problem with Canada`s East Coast operations has been the gas-to- oil ratio, which in Hibernia is 2 to 1. But the results from North Ben Nevis are showing up at 1 to 1, and over a much smaller area than Hibernia, according to James Doak of First Marathon Securities. That means Husky can piggyback on the commercial infrastructure.

``The question is, do you want to be first or the one keeping pace? The advantage to North Ben Nevis is that Mobil and the other companies broke ground, reaching the threshold of commercial reserves and installing the means of bringing oil and gas to shore. With Mobil building a very sophisticated gravity system on the ocean floor, similar to Statfjord in the North Sea, the operator group at North Ben Nevis could use a less expensive floating system tied to the Mobil infrastructure,`` Doak said.

For Husky and Bow Valley, the largest independent Canadian players in the area, the news could not have come at a better time. Under new rules announced by the federal government in last May`s budget, the government is replacing incentive payments for frontier drilling with tax credits, a move that benefits the major multinational oil companies more than the independents because of the high cost ($40 million-$50 million) of drilling exploratory wells.

Husky`s Pogontcheff tried to put the North Sea comparison into perspective.

``The East Coast is not comparable to the North Sea except in the number of dry holes we`ve each had to drill. What we`ve discovered doesn`t mean we`ll have the same final results, but we`re still optimistic.``